Doray Minerals : Production Forecasts and Operational Updates for the 2017 Financial Year

ASX Announcement 27 January 2017

ASX: DRM

PRODUCTION FORECASTS AND OPERATIONAL UPDATE FOR 2017 FINANCIAL YEAR Doray Minerals Ltd (ASX: DRM, "Doray" or "the Company") announces the following production forecasts and operational updates for the current 2017 financial year. Total production from the Deflector and Andy Well operations for the year ending June 30th 2017 is forecast to be between 100,000 - 110,000 oz. of gold and 4,200 - 4,600 tonnes of copper.

• The Deflector Mine is forecast to produce between 50,000 - 55,000 oz of gold and 4,200 - 4,600 t of copper for the year ended 30th June 2017. These numbers include metal contained in the native copper gold product
• Negotiations are being finalised for the sale of the native copper gold product which is expected to yield approximately 10,000 oz of gold. The majority of the revenues associated with this sale are expected to fall in the current quarter ended March 31st 2017
• The Andy Well Mine is forecast to produce between 50,000 - 55,000 oz. of gold for the year ending June 30th 2017
• Adjustments to the mine plan at Andy Well while mining through the section of reduced strike length of the Wilbur ore body to optimise cash flow
• Mining lease application and heritage surveys have been completed at the 266,000 oz Gnaweeda Prospect (see ASX release 20 July 2016)

Deflector Mine

Mining and Processing Operations Update

Mining in the open pit at Deflector will be completed by the end of January which will see the transition to solely underground mining commencing in early February. Ongoing studies continue to reveal opportunities for open pit extensions that could potentially be brought into the mine plan to optimise production schedules.

Doray is currently in negotiation with two parties in a competitive tender for the sale of the metal contained in the native copper gold product, which is being produced at Deflector by the processing of the oxide and transitional ore. This product stream was in addition to the bullion and

concentrate streams. The remaining concentrate and bullion produced by the operation has been sold as per normal under our sale agreements.

Stoping has commenced in the 1200 Level of the ore body and mining of the primary ore has begun in 1180 level ore drive development (see figure 1 below). The company will complete processing of the transitional ore approximately by the end of March and begin processing the primary ore at that time. Once processing of the primary ore begins it is expected that the native copper gold product will cease being produced and the product streams will revert to concentrate and bullion.

Figure 1. Photo of the 1180 Ore Drive South showing the quartz-pyrite chalcopyrite primary ore

Andy Well Mine

Mining and Operational Update

Ongoing reviews and optimisation of the current geological modelling has reduced the number of forecast ounces that will be produced by the Wilber and Judy lodes in the second half of this financial year. Current stoping is on a lower grade section of the Wilber ore body which has a significantly reduced strike length to that mined previously. Drill hole intersections below these current mining levels in Wilber indicate that the ore body strike length is considerably increased at depth. See Figure 2 below.

Figure 2. Long Section of the Wilbur ore body.

Following a complete review of the entire operation, capital development will be optimised to reflect the production profile, and although lower ounces will be produced for the remainder of this financial year and into next financial year, it will ensure that cash flow is optimised.

Doray's Managing Director, Mr Leigh Junk, said that although adjustments were required to the previous mine plan, the operation would produce more cash flow than continuing with a higher production and higher cost model.

"This places Andy Well in a far more favourable position going forward." Mr Junk said.

A drill program is currently underway to drill out Wilber Deeps (see Figure 2 above) to test the ore body at depth. The aim of this drilling is to extend the Wilber ore body and add significant production for future years.

The current underground production schedule at Andy Well is designed to run concurrently with the feasibility study commencing on the Gnaweeda prospect, situated 15 km's from the Andy Well processing facility.

The Gnaweeda deposit is viewed as a potential source of long life bulk tonnage open pit ore to complement the ore from Andy Well underground. This has the potential to change the production profile at Andy well and significantly extend the mine life of the operations. An updated resource

model for Gnaweeda (current resource 266,000 oz. see ASX Announcement 20 July 2016) will be completed in February and a feasibility study to determine the viability of a mining operation will then immediately commence.

-ENDS-

For further information, please contact:

Mark Hepburn Corporate Development Manager Doray Minerals Ltd [phone]

Leigh Junk Managing Director Doray Minerals Ltd [phone]

About Doray Minerals Limited

Doray Minerals Limited is an Australian gold producer with two Western Australian gold projects: the Andy Well Gold Project, which commenced production in August 2013; and the Deflector Gold Project, which commenced production in May 2016.

Doray also has a strategic portfolio of gold exploration properties within Western Australia and South Australia. The Company's Board and management team has a proven track record in discovery, development, and production.